Post Office provisionally liquidated again

The Post Office has been placed under provisional liquidation again after a successful application from one of its creditors. This will have major repercussions for millions of people who collect their Sassa grants from post offices all over the country.

The Master of the High Court issued a certificate of appointment to Kaap Vaal Trust on 30 March 2023. Kaap Vaal Trust applied for the provisional liquidation after the Post Office was unable to pay its debts.

The Post Office’s debts reportedly amount to R4,4 billion. The organisation received a R2.4 billion bailout from government earlier this year.

The organisation told the SABC last week that it will issue a statement this week and the media spokesperson has confirmed that it is preparing a statement. The Post Office also told the SABC that it has been dealing with this matter for a while now and there is no reason to believe that this one would be any different.

Other entities have also approached the courts to apply for the liquidation of the Post Office as it was unable to pay its creditors. The next court date is on 1 June 2023.

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What is provisional liquidation?

Provisional liquidation is a temporary form of liquidation meant to preserve the assets of an organisation while its financial affairs are investigated or a final liquidation planned.

The provisional liquidator takes control of the entities’ assets and operations and tries to protect and maximise the value of these assets until a final liquidation or other resolution is determined.

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Not the first provisional liquidation for Post Office

This is not the first time that the Post Office was placed under provisional liquidation. It also happened in December 2020, when another creditor applied for liquidation after the Post Office failed to pay its debt.

During that provisional liquidation, the provisional liquidators investigated the Post Office’s financial affairs and developed a plan for its future. The liquidators also managed the Post Office’s operations, including parcel and mail delivery to ensure that it continued to operate smoothly and without interruption.

The provisional liquidators engaged with the Post Office’s creditors, stakeholders and employees to gather information and consulted with government, the majority shareholder, to explore options to recapitalise or restructure the company.

In March 2021, the provisional liquidators presented a draft business plan to the creditors and stakeholders that proposed a series of measures to address the company’s financial difficulties, including disposing of non-core assets, restructuring the operation and recapitalising it using a government bailout.

The creditors approved the plan in April 2021, and the provisional liquidation was terminated. The Post Office is now supposed to implement the plan to restore the company to financial health and ensure its long-term viability.